Innovación y tecnología
A primer on innovation - Chapter 3
10 marzo Por: Alfred Max Hofbauer Balmori
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Continuing our conversation on innovation, Innovation is a strange thing, that can have many different aspects, depending on each observer´s position. [1] [2]

To real, compulsive, innovators, Innovation is not a job but a way of life!
To industry, on the other hand, Innovation is a much sought-after, but at the same time, carefully-shunned conundrum.
These two points state, in an -admittedly- very compressed form, where an important impasse or problem lies. While Innovation -truly is- any industry´s livelihood, as well as the origin of everything “human”, it also is anti-establishment - disruptive not just in a technological sense, but also a menace to administration, organization and some existing hierarchies.

So, the immune system of most healthy companies will quickly suppress or annihilate the tiniest sprout of it upon sight. The risk in not doing so is deemed too high to ignore.

That is not to say that there are not companies that embrace innovation as a fundamental way of life, or even as an important business unit. Yet, in most (and we may venture to say, all) of these companies, eventually the bureaucrats “win”. Innovation is tamed, muzzled, put in a box, and trotted out for investors in ever-more boring and predictable “incremental improvements” to products. The fantastic profits that were brought about by being truly disruptive can no longer be “risked” by allowing the innovators to run free. The ponderousness of a large and slow-moving corporate behemoth asserts itself with nearly inevitable certainty. There may be enough innovation left in a company to stay afloat, relevant, and competitive – but that frenetic initial growth is gone. The same does not happen to the market, where breakneck-innovation is clearly desirable. To linger, or to rule, that´s the question…

On the other hand, Innovation is to human beings as biting is to sharks… It´s what we do, it´s what has set us apart and it´s what allows us to survive. Industries are human-made entities, and human-ish things should obviously be expected as an integral part. It can also be argued that innovative companies can be considered as more human than we’d like. Initially, growth takes up a huge percentage of the resources, time, and energy. Changes occur daily, and these are coupled with a vast thirst for learning and exploration. Eventually, however, these changes slow, and learning drops off the steep curve it established in the early parts of life. The habits of maturity set in, and risk aversion and prudence become the way of life. Senescence…

There is, however, a conflict of interests between an industry itself and its higher echelons of managers, who conceive themselves as some kind of bodily incarnation thereof and believe -hand-on-heart- that their own whims are potent manifestations of the company´s “soul”. The upper management of a mature company must also guard the future safety and its profitability, leading to a powerful preference for managers who will exert strong control and swiftly attack any threat to the carefully monitored Status Quo. While the lower colors seem to tolerate Innovation well enough, the “guardians of stability” in the Ivory Tower often take a rather different stance, and can fight an all-out, though covert, war.

The utter need for innovation to assure the company´s continued existence, too often falls prey to the master (or masters) of the fiefdom´s myopia. The already delicate relationship between an entity’s long-term stability and the lifeblood that is innovation was given an even greater threat and challenge when the Industry-4.0 hype started to lean heavily towards innovation. Worse even, because confidentiality and information control, corporate oversight, and resource management issues seemingly requires the disruptive fire that is innovation to be lodged in-house, co-existing with the crown jewels – the over-cautious will try to quench it before it consumes the company´s future stability. Again, that is not to say it cannot be done, only that it requires a corporate culture, management, leadership, vision, and internalization of the mission that very, very few places ever manage to do.

In mid-2017, the well-known German engineering company EDAG, based in Wiesbaden, Germany, wrote in a quite open and frank way about this dilemma [3]

A disruptive technology is an innovation that has the potential to completely supplant an existing technology, product or service. In this way, the continual development of the existing product is disrupted. The new proposal generally comes from an unexpected direction.
In the discussion about Industry 4.0, the fact that there will be disruptive changes, is stressed again and again. It is then pointed out that, in order to handle this, all one needs to do is to pay close attention to new business models. The best thing is to employ an innovation consultant, who will then take care of everything.
Unfortunately, this is a part of the Industry 4.0 illusion. Disruption cannot be planned in advance, nor arranged by consultants –otherwise it wouldn't be disruption. Essentially, the company's task is to effectively monitor the market, to quickly detect any disruptive change that threatens the company's own business model. By means of intensive customer orientation, the attempt will also be made to discover potentially new products, which will by themselves, be able to bring about a disruptive change. It would, however, be foolish to concentrate solely on finding new business models.
Understanding this dilemma, many companies that are trying to re-kindle the innovation that set them on their present course of success, or grow along completely new lines of innovation, turn to the creation of an internal innovation group. We can consider these groups as specialized Think Tanks whose purpose is to generate new, challenging, and disruptive ideas. However, it’s not quite as easy as it may seem:

“Let´s do the Think-Tank!” Everybody clap your hands…chant! ‘Investigate, Innovate, Integrate’

While operational Think Tanks are veritable treasure troves who´s deeds cannot be praised enough, the inception of new ones is an expensive, challenging and time-consuming enterprise, that may never pay off.

It must be a long-term commitment.
To be truly effective, they must grow naturally by the slow flocking-together of suitable people, with shared interests, internalized goals and perspectives. It’s difficult, if not impossible, to assign a team of people to make a successful Think Tank simply from being given the assignment.
Many nascent Think Tanks are not “classically” (economically) productive at all, and may remain that way for years.
Mature Think Tanks are explosively productive, but many of their creations may not be applicable to their home industry´s interests.
A Think Tank is not to be viewed as a cure to a momentary problem, but as an integral part of the company, necessary during it´s whole lifespan.
There are far more potential customers and problems than available Think Tanks.
A well-greased and functioning Think Tank is an infinitely priceless and surprisingly delicate ecosystem.
Poaching within the company and by external Think Tanks is fairly common, and these sudden personnel changes can alter the effectiveness of the Think Tank in surprising and unexpected ways.
Rules and standards can cripple innovation. Not to say that they don’t have a place within innovation, but rather that they must follow a different set of rules than in day-to-day operations. Disruption cannot occur without challenging the status quo.
A Think Tank must be based on true Innovators; people who do Innovation as a “modus vivendi”. They are typically not governed by mandates, but rather by challenges.
Innovation thrives in a starkly different ecosystem to a typical corporate culture. Schedules, dress codes, formality, report-writing, quarterly reviews, incessant metrics, and all the trappings of a typical management structure will slowly drown the creativity of any innovation group.
Think tanks must be kept busy 24/7 on a menu of diverse challenges as monotonous diets are a sure and slow poison. This characteristic has an unexpected second outcome: Secretly, many, very successful Think Tanks also solve problems for other (typically, far away) companies, just to maintain their innovator´s already broad scopes, and prevent “Workshop Blindness”.
It should neither be too near, nor too far away from the company´s core. The very ideas coming out of a think tank will threaten the comfort and stability of many if it is too close to the core. And yet, it can’t be so far removed that it won’t benefit from the company’s resources and knowledge base.
For many, if not most, companies, there is not a sufficiently deep pool of risk-taking available to undertake this process independently. For many, only external Think Tanks can comply with all these, seemingly contradictory requirements.

To ace the obvious confidentiality issues by the means of air-tight non-disclosure agreements is only one of many steps needed to get them going. Yet, all this has been done before, and it seems like a needless complication to try and re-invent something that works fine.

If it ain’t broke, don’t fix it!
No need to complicate things, they´ll do it on their own, anyway.

The creation of dedicated Innovation Centers isn´t a new idea. But, throughout history, only a few of them were even publicly known, much less famous:

Thomas Edison opened a research laboratory in Menlo Park, NJ, in 1876. The site later became known as “The Invention Factory”, since Edison and his employees worked on several different inventions at any given time. It was there, that Edison developed the phonograph, his first commercially successful invention. The New Jersey Menlo Park laboratory was closed in 1882, when Edison moved into his new larger laboratory in West Orange, New Jersey. [4] Even so, “Menlo Park” became a buzz-word, a household item, -one of very few…
Skunkworks is another storied center of innovation, which produced supersonic jets back in the days where computer-aided calculations and design were not available. [5]
The Internet is an offshoot of work at ARPA, and the projects from the modern iteration known as DARPA have led to advances in robotics, GPS, spaceflight, and autonomous vehicles among many other things. [6]
These are three separate types of centers, with Menlo Park being a primarily private business, Skunk Works belonging to a private company but serving many military projects, and DARPA being a government-sponsored think tank that nonetheless sits outside the direct military operations structure.

Today we might call these places “Innovation Centers”, rather than “Invention Factories”. The words have changed, but the essence is very much the same: Custom-tailored Innovation, Research and Development, for paying customers, too wary to host such a difficult entity at home. They found what they needed, without the dangers it typically brings about.

In this truce both parties came out winners, as partners in a complicated relationship, unable to live too close together, or too far apart. The method held true until now, when suddenly “everything old is new again” and we collectively act like we have never had anything of it before. Perhaps it is the “newness” of such corporate juggernauts that the web age birthed, that has given us the idea that innovation can reside without complications inside the “mothership”. However, given another 20, 50, or 100 years, we will find these new innovators to have frozen into corporate giants on their last legs, or even gone completely extinct. For a master-class on these subjects, we recommend the late and great Dr. Geoffrey West and his work on biology-innovation-business-growth-networks paradigm. [7]

Until a new model is demonstrated that can be broadly applicable, the basic truth remains unchanged for so many companies and enterprises (though again, not all):

Outsourcing Innovation is the only viable game in town!

As we have insisted before, UPAEP is a leader in Latin America in generating this very kind of ecosystem with CESAT. We must continue to nurture and exploit that differentiator in a way that will allow companies under our sphere of influence to be truly transformative in their work by collaborating with a world-class Innovation Center like CESAT. Let’s take up the torch of that leadership and light the way to a different future for corporate innovation in Latin America and the world!

Referencias / References

Alfred Max Hofbauer Balmori and Juan Manuel Lopez Oglesby, "A Primer on Innovation," CESAT and Graduate School, UPAEP, Puebla, Science Strategy Position Paper 2019. [Online].
Alfred Max Hofbauer Balmori and Juan Manuel Lopez Oglesby, "A PRIMER ON INNOVATION - CHAPTER 2," CESAT and Graduate School, UPAEP, Puebla, Science Strategy Position Paper 2019. [Online].
EDAG Engineering GmbH. (2018) EDAG Engineering GmbH. [Online].
EDAG Engineering GmbH. (2018) EDAG Engineering GmbH. [Online].
The Thomas Edison Center at Menlo Park. (2009) Thomas Edison and Menlo Park. [Online].
The Thomas Edison Center at Menlo Park. (2009) Thomas Edison and Menlo Park. [Online].
Lockheed Martin. (2019, Mar.) Skunk Works. [Online].
Lockheed Martin. (2019, Mar.) Skunk Works. [Online].
Defense Advanced Research Projects Agency (DARPA). (2019, Mar.) History and Timeline: Where the future becomes now. [Online].
Defense Advanced Research Projects Agency (DARPA). (2019, Mar.) History and Timeline: Where the future becomes now. [Online].
Geoffrey West. (2015, Oct.) Transition 2015: Geoffrey West on the Life and Death of Companies. YouTube Video. [Online].
Geoffrey West. (2015, Oct.) Transition 2015: Geoffrey West on the Life and Death of Companies. YouTube Video. [Online].
Dr. Juan Manuel López Oglesby
Director, Posgrados en Ciencias de la Ingeniería Biomédica

Fis. Alfred Max Hofbauer Balmori
Consultor Tecnológico e Innovador, CESAT